Children are projected to make up a smaller proportion of Australia’s population over the coming decades, while the population aged 65 years and over is projected to increase.

The ageing of the population is one of the major transformations being experienced by Australia’s population,(SEE ENDNOTE 1) and is a current focus for both economic and social policy. Much of the discussion around population ageing focuses on issues associated with an increasing proportion of older people; for example, expenditure associated with income support, the provision of health and disability services, and family and community care. However, as population ageing also relates to the declining proportions of younger people in the population, it has implications for all sectors of the community and policies related to all stages of the lifespan.(SEE ENDNOTE2) This article draws on the latest ABS population projections to explore the impact of continued population ageing on three broad life stage groups - children, working age Australians and older Australians.

TRENDS UNDERLYING POPULATION CHANGE AND PROJECTIONS

Population projections illustrate the changes that would occur to the population if certain assumptions about future fertility, mortality and migration were to hold true over the projection period. Each time new projections are produced these assumptions are reviewed to take into account recent demographic trends, and in this way they reflect underlying trends in Australian society. For example, the population projections produced in 1999 (see Australian Social Trends 2001, Population projections for the 21st century, pp. 26-31) assumed a total fertility rate (TFR) of 1.6 for the low series projection. In the latest projections, produced in 2003, a low TFR alternative of 1.4 was included in the main projection series, reflecting that, over the long term, fertility rates in Australia and other developed countries have continued to decline.

PROJECTED POPULATION - AUSTRALIA

POPULATION PROJECTIONS

This article uses ABS population projections, produced in 2003, spanning the period 2002 to 2101 for Australia, and 2002 to 2051 for the states and territories. The base population for the projections is the preliminary estimated resident population at 30 June 2002.

The projections are not intended as predictions or forecasts, but as illustrations of the population change that would occur if the assumptions about future fertility, mortality and migration were to hold true over the projection period. The assumptions made are not intended to show the full range of possible futures, but rather illustrate some of the most likely possibilities.

This article focuses on the three main projection series which cover three scenarios for future population growth - high (Series A), medium (Series B) and low (Series C).

As health outcomes continue to improve and mortality rates decline, the life expectancy of Australians is continuing to increase. While previous population projections assumed that these trends would continue each year for a limited period, the latest projections include a ‘high’ life expectancy alternative, in which recent life expectancy gains are assumed to continue each year for the full duration of the projection period. Under this alternative, life expectancy is assumed to increase to 92.2 years for men, and 95.0 years for women by the year 2050-51.

Given historical and recent trends, future levels of fertility and mortality can reasonably be accommodated within a range of population projections. However, there is less certainty about future levels of migration, given its historical volatility.(SEE ENDNOTE 3)In the latest projections, the medium assumption for net overseas migration is a gain of 100,000 people per year, somewhat higher than that used in the medium series of past projections (90,000 in the 1999 based projections and 70,000 in the 1997 based projections - see Australian Social Trends 2001, Population projections for the 21st century, pp. 26-31, and Australian Social Trends 1999, Our ageing population, pp. 6-10).

POPULATION GROWTH

The combination of assumptions about future fertility, mortality and migration interact to influence the size of Australia’s projected population. In all of the latest projection series, Australia’s population continues to increase in the short term. In Series A, with high fertility, migration and life expectancy assumptions, this growth continues throughout the projection period, with the population projected to reach 37.7 million by 2101. In Series B, with lower fertility, migration and life expectancy assumptions, the population peaks at around 26.7 million in 2069 and then gradually declines to 26.4 million by 2101. In Series C, in which fertility and migration assumptions are lower again, the population peaks earlier, at around 23.3 million in 2039, and then declines steadily to 18.9 million by 2101. In this series Australia’s population is projected to be 4% smaller in 2101 than it was in 2002.

POPULATION AGE STRUCTURE - AUSTRALIA

INTERNATIONAL COMPARISON

Population ageing is occurring on a global scale, with faster ageing projected for the coming decades than has occurred in the past. Between 1950 and 2000 the median age of the world’s population rose just three years (from 23.6 to 26.4 years). In contrast, from 2000 to 2050 the median age is projected to increase by 10 years, to reach 36.8 years. Globally, the population aged 60 years and over is projected to nearly triple by 2050, while the population aged 80 years and over is projected to experience a more than fivefold increase.

While Australia’s population is projected to remain relatively old by world standards, it is relatively young compared to some other developed countries (see Australian Social Trends 2004, International comparison-population projections, p. 194). Japan, Slovenia and Latvia (each with a projected median age of 53 years) and Italy and Estonia (each 52 years) are projected to have the world’s oldest populations by 2050. In these countries not only is the median age rising, as low fertility rates contribute to smaller proportions of young people in the populations, but the overall size of the populations is projected to decline. By 2050, Japan’s population is projected to have declined 14% from its size in 2000, and Italy’s to have declined 22%.

Trends in fertility, life expectancy and migration affect not only the population’s size, but also its age structure. Australia’s population aged steadily throughout the last century, apart from a reversal in 1947-1971 due to the post-war baby boom (see Australian Social Trends 1999, Our ageing population, pp. 6-10). All of the main projection series indicate that Australia’s population will continue to age.

While Series A and B project that Australia’s population will be larger in 2101 than in 2002, this growth is not evenly distributed across the age groups. In Series A, the number of people in each five-year age group is projected to increase, but there is more growth in the older age groups than the younger age groups. In Series B, all the population growth is concentrated in the age groups 20 years and over - the number of people aged 0-19 years is projected to decline. In Series C, while the number of people aged 55 years and over is projected to increase, the population aged 0-54 years is projected to decrease, resulting in overall population decline.

As a result of the different growth rates projected for different age groups, the age structure of the population is projected to change. The median age of Australia’s population is projected to increase in all of the main series, from 35.9 years in 2002, to between 47.9 years and 50.5 years in 2101.

At the national level, population ageing is largely due to falling fertility rates and, to a lesser extent, to increasing life expectancy. However, the age structures of the state and territory populations are also influenced by interstate migration. For example, in recent years more young adults (aged 15-24 years) have tended to leave the state of Tasmania than have moved there,(SEE ENDNOTE 4) contributing to the older age profile of that state’s population. Historical differences in fertility, mortality and migration mean that some states are more advanced in terms of population ageing at the outset of the projections.

CHILDREN

The number of children in Australia’s population, and their distribution across regions of Australia, has implications for the provision of a range of services, including child care, schools and other children’s services. In all of the main projection series, children (aged 0-14 years) are projected to form a smaller proportion of the Australian population in 2101 (between 12% and 15%) than they did in 2002 (20%).

STATE AND TERRITORY PROJECTION ASSUMPTIONS(a) - SERIES B

Total fertility rate

Net overseas migration

Net interstate migration

babies per woman

persons per year

persons per year

NSW

1.63

38,900

-17,000

Vic.

1.51

25,200

-6,000

Qld

1.64

19,500

26,000

SA

1.59

2,800

-2,500

WA

1.61

12,300

2,000

Tas.

1.81

390

-1,500

NT

2.14

290

-500

ACT

1.46

590

-500

Aust.

1.60

100,000

. .

(a) It is assumed that the mortality differentials between states and territories, based on those observed during 1999-2001, will remain throughout the projection period.

While information on the projected declining proportion of children in the population can assist strategic planning, the number of children also remains important for planning service provision. Between 2002 and 2003 the number of children in Australia declined.(SEE ENDNOTE 5) In Series A, the combination of a higher assumed fertility rate and higher overseas migration results in the projected number of children increasing slightly each year, from 4.0 million in 2002 to 5.5 million by 2101. However, in Series B and C the decline continues, with the number of children projected to fall to between 2.3 and 3.6 million in 2101.

Projections to 2051 show that in every state and territory the proportion of children in the population is projected to decline. However, the extent of this decline varies. The Northern Territory, with the highest assumed total fertility rate, is projected to have the largest proportion of children in its population (between 18% and 22%) in 2051. South Australia, with a relatively low assumed TFR and assumed interstate migration losses, is projected to have the lowest proportion of children by 2051 (between 11% and 14%).

However, for each state and territory, except Tasmania and South Australia, Series A projects growth in the number of children to 2051. The Northern Territory and Queensland are projected to experience the largest relative increases in the number of children. In the Northern Territory, where the TFR is projected to remain relatively high, Series A projects that the number of children will almost double, from 50,900 in 2002 to 101,300 in 2051. In Queensland, Series A projects an increase of 62%, from 779,600 children in 2002 to 1.3 million in 2051.In Tasmania and South Australia, the number of children is projected to decline in all three of the main series. In Series A, the number of children in Tasmania declines by 16% between 2002 and 2051, while in Series C the number of children declines by 59%. In South Australia the number of children is projected to decline by between 23% and 45% over the period.

THE WORKING AGE

The size and structure of Australia’s future labour force is dependent on a wide range of factors, including domestic and international economic conditions and policies relating to education, labour force participation, employment and retirement. However, when looking forward over a number of decades, ‘demographic factors tend to assume much more important roles in driving the labour force than do cyclical (economic) factors’.(SEE ENDNOTE 6)

The size of the population aged 15-24 years has implications both for labour supply (68% of this age group participated in the labour force in 2003), and for education services (48% of this age group were studying full-time in 2003).(SEE FOOTNOTE 7)In each of the three main projection series, people aged 15-24 years make up a smaller proportion of the population in 2101 (9%-10%) than in 2002 (14%). In terms of the actual number of people aged 15-24 years, in Series A this group is projected to increase, from 2.7 million in 2002 to 3.8 million in 2101. However in Series B and C, with lower fertility and migration assumptions, the number of people in this age group is projected to remain relatively stable or decline, to 2.7 and 1.8 million respectively.

In 2003, people aged 25-54 years had the highest labour force participation rates and formed the majority (69%) of the labour force.7 In each of the main projection series, people in this age group form a smaller proportion of the population over time, declining from 43% of the population in 2002, to just over one-third (between 33% and 35%) in 2101. While the number of people aged 25-54 years initially increases in each of the three main projection series, in Series B and C the number of people in this age range peaks and then begins to decline. In Series B, the number of people aged 25-54 years increases from 8.5 million in 2002, to peak at 9.6 million in 2035. In Series C, the peak occurs in 2025 at 9.0 million, and then this age group declines to 6.4 million in 2101. In Series A, the combination of higher fertility, longer life expectancy and more migrants contributing to the working age population results in a growing number of people aged 25-54 years throughout the entire projection period. In this series, the number of people aged 25-54 years increases to 12.5 million in 2101.

WORKING AGE POPULATION

Regardless of whether the size of the working age population grows or declines, its composition is projected to shift towards the older age groups. While the proportions of the population in the age groups 15-24 years through to 45-54 years are projected to decline, the proportion aged 55-64 years is projected to increase slightly (from 10% in 2002 to around 11%-12% in 2101). The number of people in this older age group is projected to increase in all three main series, from 1.9 million in 2002 to between 2.3 and 4.1 million in 2101. Currently, people aged 55-64 years have lower labour force participation rates than the younger age groups.(SEE ENDNOTE 7) If this trend continues, shifts in the distribution of the working age population towards the older age groups may impact on future labour supply.

Projections of the future size and structure of the working age population differ across the states and territories depending on the assumptions made and the current age structure of the populations. In Queensland, where population gains through both interstate and overseas migration are assumed, the primary working age population (those aged 25-54 years) increases in size under each of the projection series (by between 11% and 73% by 2051 ). In New South Wales, Victoria, Western Australia, the Northern Territory and the Australian Capital Territory, Series A and B project an increase in the number of people aged 25-54 years, while Series C projects decline. In Tasmania and South Australia, where fertility is projected to remain below replacement level and net migration is assumed to either be negative, or only marginally positive, the population aged 25-54 years declines under all the main series. The number of people in this age group is projected to decline between 2% and 50% in Tasmania, and between 22% and 27% in South Australia by 2051.

Irrespective of an increase or decrease in the number of people aged 25-54 years, in all states and territories, in all of the main series, the people in this age group are projected to form a smaller proportion of the total population in 2051 than they did in 2002.

OLDER AUSTRALIANS

Increased numbers of older Australians may have implications for associated expenditure on income support, housing and health services, although increasing service demand may also provide a potential economic stimulus. A largely healthy, independent older population can also form a valued social resource, for example in providing care for others, sharing skills and knowledge and engaging in volunteer activities. The population aged 65 years and over is projected to increase from 2.5 million in 2002, to between 6.1 and 11.7 million in 2101. As a proportion of the population, this is an increase from 13% to between 29% and 32%.

POPULATION AGED 85 YEARS AND OVER

In 2002, South Australia and Tasmania had the highest proportions of their populations aged 65 years and over (15% and 14% respectively). These states are projected to retain the oldest age profiles, with those aged 65 years and over projected to make up around one-third of each state’s population in 2051.

While the proportion of people aged 65 years and over is not projected to be as high in the other states and territories, in all of the main series in each state and territory there is a substantial increase in the number of people in this age group. Some of the highest relative increases are projected for the Northern Territory, Queensland, the Australian Capital Territory and Western Australia, where the populations aged 65 years and over are projected to at least triple in size by 2051.

The highest projected growth rates overall are among the population aged 85 years and over, which is projected to increase from 1% of the total population to between 7% and 11% over the projection period. Growth in this age group is of particular interest, given the potential need for support among the frail aged, for example in the areas of assisted housing, health and disability services. Australia-wide, this age group is projected to be between five and fifteen times larger in 2101 than in 2002. From 280,400 in 2002, Series B projects an increase in the number of people aged 85 years and over to 1.8 million in 2101, and Series C projects an increase to 1.5 million. In Series A, the impact of longer assumed life expectancy is evident, with the population aged 85 years and over projected to increase to 4.1 million.

The pattern of growth across the states and territories for the population aged 85 years and over is similar to that for the population aged 65 years and over. South Australia and Tasmania are projected to remain the states with the highest proportions of people aged 85 years and over (8%-12% of South Australia’s population in 2051, and 8%-11% of Tasmania’s). The Northern Territory, having a younger age structure than the other states and territories at the outset of the projections, and a higher assumed fertility rate throughout the projection period, remains the state or territory with the smallest proportion of its population aged 85 years and over. The Northern Territory is projected to have around 1%–2% of its population aged 85 years and over in 2051, a similar level to that experienced in the other states and territory in 2002. However, the Northern Territory is still projected to experience substantial increases in the number of people in this age group. From 600 people in 2002, the number of people in this age group is projected to increase to between 3,100 and 9,300 in 2051.

Queensland, Western Australia and the Australian Capital Territory are all projected to experience large increases in their populations aged 85 years and over. In these states this age group is projected to be between seven and fifteen times larger in 2051. However, New South Wales, Victoria and Queensland, being the most populous states, remain the states with the largest number of people aged 85 years and over. By 2051, New South Wales is projected to have between 488,000 and 815,700 people in this age group, which is a five to eightfold increase on 2002. Victoria is projected to have between 383,600 and 634,500 people aged 85 years and over (a five to ninefold increase), while Queensland is projected to have between 340,200 and 647,800 people in this age group (a seven to fourteenfold increase).

AGE STRUCTURE OF THE ABORIGINAL AND TORRES STRAIT ISLANDER POPULATION

The Aboriginal and Torres Strait Islander population has a much younger age structure than the non-Indigenous population. Based on experimental estimates of the Indigenous population, in 2001 the median age of the Indigenous population was 20.5 years, compared with 36.1 years for the non-Indigenous population. Children aged under 15 years comprised 39% of the total Indigenous population (compared with 20% in the non-Indigenous population), while people aged 65 years and over represented only 3% (compared with 13%). The relatively young age structure of the Indigenous population is due to higher fertility and mortality rates than those experienced by the non-Indigenous population.

Projections of the size and age-structure of the Aboriginal and Torres Strait Islander populations will be available in 2004 in Experimental Estimates and Projections of Indigenous Australians (ABS cat. no. 3238.0).

Estimates of the resident Indigenous population are considered to be experimental in that the standard approach to population estimation is not possible because satisfactory data on births, deaths and migration are not generally available, and because of the intercensal volatility in census counts of the Indigenous population. Further information is available in Population Distribution, Aboriginal and Torres Strait Islander Australians, ABS cat. no. 4705.0.